Someone sent me that analysis on the NB Power deal written by an energy expert in Maine and commissioned by AIMS. The report is called “An Analysis of theNew Brunswick-Hydro Quebec MOU“**.
The report for me falls flat. It restates the basic facts and confirms the $1.25 billion in rate savings during the initial phase and then rightly confirms that the savings beyond the five years are more speculative.
I think we need more experts to weigh in on this deal up or down. There have been a few like Energy Probe that are very positive on the deal and of course the NERA report itself. But this report is just a restatement of facts that we have discussed here ad nauseum. I hope AIMS didn’t pay too much for that piece.
I started a little experiement yesterday that I think is interesting. I started asking folks what was their initial reaction to hearing about this deal – before even seeing the details – and then correlated the responses to their current position. Of the nine people I talked with seven are against the deal (some adamantly) and two are for it. Of the seven – all said their initial hunch was negative and the two for the deal – they both thought it would be a good thing. Doesn’t tell us much – except that we all operate on intiution probably more than we would care to admit.
I have also heard – several times now – that Emera took a long hard look at buying NB Power a few years ago under the Lord government but determined it wasn’t worth the debt on the books. I can’t get independent verification of this (it has come up several times but not from somebody who should know) but it would be interesting to know if it is true and get a copy of their assessment. I suspect that Emera is in lockdown mode on this now because they do not want the sale to go through.
I still maintain – my own little drama this last weekend notwithstanding – the discourse is starting to level out on this and people are starting to think things through.
**Thanks for sending the direct link to this report
I found the link from CBC: http://www.aims.ca/library/NBPowerMOU.pdf
http://www.aims.ca/aimslibrary.asp?ft=3&id=2773
This is a link to the web site, probably the report was not linked when you looked for it.
http://www.aims.ca/library/NBPowerMOU.pdf
There it is in all its finite glory
David,
Here’s a link I found on the CBC site
http://www.aims.ca/library/NBPowerMOU.pdf
Re the prospects five yrs after the sale. Analyses in support of or against the sale have both indulged in a lot of speculation as to what happens down the road. Many things such as fossil fuel prices will impact on those predictions. But all things being equal, we can’t really compare apples with apples until we get a better picture of the actual condition of NB Power.
You know somebody can be trusted to at least be objective when they post data that works against their view! In this case, I found a LOT more in this report than just a restatement of facts. One thing to point out is that much of ‘obvious’ points are now obvious because of the research and opinions of a whole bunch of dummmies not nearly as smart as ‘experts’.
But it was interesting to read about the FERC and the fact that apparantly Maine can only access its New England market through NB Power. Not sure how that works exactly,but these guys are ‘experts’. IF Maine starts making noise it could be like NB’s opposition to the Passamaquoddy LNG terminal-in that ITS interests will be affected by actions north of the border. According to the FERC no company can hold a monopoly over energy exports, and with NS, NFLD and PEI cut out, if this isn’t a monopoly I don’t know what is. So other interests could very well have something to say about the deal.
This does tend to justify people’s opposition to the deal, and they are being increasingly proven right. I’m not a numbers person, so missed the fact that most of the ‘savings’ in the NERA report were stretched out PAST 2040! Thats 30 years from now. Take a look at how energy use has changed in the past 30 years. On TVO last night a show on magnets talked about the next generation of high powered magnets-being used to power levitating trains, and being made of plastic which will radically lower their cost and improve their efficiency by 100. The energy picture in 2040 is going to be something that no expert can predict.
But at least we now have some experts who are backing up what the ‘ugly masses’ believed from the get go.
And for others who don’t read the report, its not often stated that there are at least two ‘interfaces’ between PQ and NB that must be ‘integrated’ in order for Quebec to access that US market through NB-and according to this report, its NBers who have to pay for that as well.
Alward, Savoie and AIMS have all shown there uncertainty for the deal in the long term (post-5 years). I can’t say I blame them considering this isn’t the first time this government has taken a knee jerk, short term attitude to a problem that could be solved with a bit of intuition, patients, hard work, and most important of all, a littlt bit of trust in the market.
Let me remind you that the car insurance issue was once a huge elephant in the room where Graham flirted with the possibility of a 25 per cent insurance rate drop and even suggested implementing a public auto insurance scheme as opposed to a market-driven industry. I shouldn’t have to tell you where all that fear mongering ended up. 🙂
David
I think you are right about the Emera interest, although I have not seen a copy of their assessment. I’m also told they are currently in discussion with Hydro Quebec, notwithstanding the comments of Premier Dexter.
My concern with your numbbers and I don’t dispute them is that attitudes toward this deal seem to be hardening and it may take some kind of sweetner to get people to judge it objectively.
Cheers
Bill
For Emera it should be pointed out that they have a lot of debt as well, thanks to the Brunswick gas line and other caribbean investments. They are carrying 2 billion in debt which is mortgaged against the future-but as Enbridge in NB shows, the future isn’t something thats in the bank.
This seems to be a fast moving concept – I heard it again today. The alternative to to HQ buying NB Power would be some kind of Emera led Atlantic Canadian electric utility. I would like to see some firm proposal put forward but that is highly unlikely. It will be floated as a reasonable alternative and left at that. I just don’t see how Emera can do it – unless the NB government makes some kind of deal where they take some of the NB Power debt.
There are other Canadian companies besides Emera, such as Fortis (which owns Maritime Electric in PEI and Newfoundland Power which operates most of the distribution and some generation in Newfoundland and Labrador) and Transalta and Brookfield Asset Management which operate different electric systems around North America. It would at least give some comfort to know if NB Power has been or will be shopped around to other potential buyers. Would we not then be comparing the idea of consumers putting part of their payments for electricity into corporate profits against the idea of putting their payments into the hands of another provincial utility which may well have the same problems of government interference that many writers maintain is the source of NB Power’s problems? Just the opinion that the debt is too high and no one would be interested, or the future rebuilding costs are too uncertain so no one would be interested is not an objective answer to this concern. There is always a right price for someone else to be interested and it would be good to know the cost of some alternatives. If Hydro Quebec believes they can make a 10% return, why would the deal not be of interest to some corporation? Maybe this would be several deals, such as selling some generating stations to one outfit and the distribution assets to another. Isn’t that the direction we were headed when NB Power was divided into several companies a few years ago?